The PIIGS: Where are they now?

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I remember the first time I heard the expression “PIIGS”. I was in a finance lecture in Boston and the professor rather smugly asked who in the class was from one of these nations. It was a very diverse class with a lot of Europeans. The acronym was relatively new at the time so only a few hands rose gingerly. In my mind's eye the  professor  then took great pleasure in explaining the term, naming the five members and finally asking the class again. This time there were quite a few Spanish, Italian and one or two Irish hands raised. I spent most of my formative years growing up in the Celtic Tiger economy. I remember hearing how we had replicated the successful Asian economies and were one of the fastest growing in the Western world. It was almost a fait accompli. Ireland had made it. Then came the crash and that afternoon in Boston where I was condescendingly reminded that Ireland was now a basket case along with the other failures of Europe; Portugal, Italy, Greece and Spain.

I am sure there were very similar feelings of disillusionment and devastation amongst the citizens all five nations. While many argue that there was never really a clear commonality between the economic situations of all five there was undoubtedly a shared impact on the national psyche. The causes and details of the crash are well known so this post will focus on their current situation, the outlook for the countries and if the PIIGS acronym has any relevance today.

Across Europe there is a lot more optimism today than at any time over the last five years. There have been some shocks in recent times, like Brexit and Marine Le Pen reaching the French Presidential run off, but overall the news has been a lot more positive and today every country in the European Union is expected to see economic growth in 2017 (see chart below). The PIIGS acronym has mostly stopped being used and Ireland has actually led many of the economic performance indicators since 2014.

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The devastation the bailout packages had on the citizens of Portugal, Ireland, Greece and Spain is slowly passing into memory. Italy did not suffer the ignominy of a sovereign bailout being forced upon them so they didn’t quite reach the same depths of despair. The images of Greek riots will live long with many. I can’t imagine many Greeks will be able to ever forget the many editorials across Europe that had provocate headlines along the lines of “Time to Let Greece Sink” or “EU needs to eject Greece”. They say that in times of true crisis you discover your true friends, Greece won’t forget how they were treated by their counterparts when they were at their lowest point.

The debt levels of Italy, Portugal and Greece remain alarmingly high. Italy is also projected to grow by less than 1% this year which will keep the markets on edge. However all five of the nations are growing and benefiting from increased tourism numbers as well as a rise in employment levels. Politically the left parties flourished in the crisis years and came to power in some capacity in Portugal, Spain and Greece. The Greek party Syriza continues to be the most prominent and currently leads the government of Greece, albeit it with a toned down version of its earlier manifesto.

I think the North/South divide is less relevant in Europe than before. The North/South divide was frequently used to contrast the hardworking/thrifty northern states and the lazy/spendthrift Mediterranean states (Ireland was somehow plugged into the latter group - Costa del Kerry if you will). This is less obvious today as Europe grows overall, benefitting from a buoyant global economy.  I believe the 2004, 2007 and 2013 expansions of the European Union will become more evident in the next five years. There is a much clearer contrast between the economic performance of the East v West than any linear North/South divide. New groups or idea blocs will emerge that reshape the internal dynamics and policies of the EU. The reaction to the refugee crisis over the last three years is an early indicator of this. I will explore this thesis in the future through a number of political and social lenses.

So are there still the PIIGS today? I never believed in the validity of this acronym and today it makes less sense than ever. It was a convenient catch all for the countries who lost the most in the last financial crash. It was the classic example of the wealthiest in society differentiating their economic position from the poorest due to their supposed character traits and hard work. Hopefully this is a lesson that will be learned and Europe can move forward in a more unified fashion when facing the great challenges of tomorrow. This certainly remains to be seen...

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